Income Protection for Millennials

As the first digitally native generation in history, millennials know frequent updates are a part of life, whether for new operating systems (OS), push notifications, or social media posts. Now as millennials gather momentum in their careers and begin building families, forecasters predict that their ability to adapt to new circumstances will be crucial for long-term success.1

At the same time, the era of updates has given people a sense that change always means a step forward. But change can go both ways — it can bring setbacks, as well. We guard ourselves against some misfortune through health insurance and other financial protections. But what happens when you’re hitting your stride in your career and, slowly or suddenly, you find yourself unable to work because of illness or injury?

This break in your earning power can have a long-term effect on your financial well-being. Now, maybe, as a young and healthy millennial, it’s easy to think: That won’t happen to me.

Again, in the spirit of updating, it’s time to refresh the thinking here.

Old OS: Disability is rare, especially for young people.

Software Update: Well, when we find out that one in four of today’s 20-year-olds will become disabled during their working years, the picture changes a bit.2 To put some color on it, let’s try a thought exercise: Picture a dinner with any three of your friends. Who’s going to face disability? The person across, diagonal, or next to you? You?

Old OS: I’m careful. I won’t need it.

Software Update: Yes, accidents are relatively rare, but most long-term disabilities are due to illness, not accidents.3 Every year, thousands of workers have to leave the workforce due to physical and mental illnesses like arthritis, MS and severe depression, and these health issues tend to begin before people turn 45.4

Old OS: It’s too expensive.

Software Update: The real expense occurs when you’re not covered. Consider this: One study estimates that a typical college graduate will earn a median income of $2.3 million over the course of a lifetime.5 But that’s assuming there is no long-term disruption in earning. If you can’t work, earning stops. Compounding that effect, when people suffer a debilitating injury or illness, they may use their savings, retirement fund, or both, to make up for the loss in income. And once that runs out, they may start taking on debt.

Most employer-funded plans will replace only 40 to 60 percent of your income. What does that look like? Imagine 60 percent of your home, your dinner, or your gas tank disappearing in a blink. Furthermore, the average disability claim lasts for over two and a half years. It can be difficult to do without income for such an extended period.

Old OS: A job for life.

Software Update: Are you supporting yourself and your family as a freelancer? You’re not alone. In 2017, the gig economy was estimated to be about 34 percent of the workforce and expected to be 43 percent by the year 2020.6 Yes, more people are enjoying being their own boss. But, as a freelancer, there’s no employer-sponsored safety net, in case of an unexpected event.

There is a way to protect your income, even if these kinds of changes come your way. Individual disability income insurance can protect a portion of your income to help you live more confidently now, and cover you for the future.

We Exist To Build Strong, Prosperous Communities By Improving The Financial Lives Of Those We Serve.

- James R. Fashano, President

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